Market Insights

Monthly Market Insights: December 2025

U.S. Markets

Stocks were mixed in November as a late-month rally nearly offsetting earlier losses from earlier in the month.

The Standard & Poor’s 500 Index rose 0.13%, while the Nasdaq Composite declined 1.51%. The Dow Jones Industrial Average edged up 0.32%.

Focus on AI

Stocks hit a rough patch early in the month as investors grew skittish over tech company valuations tied to AI.

Labor market news exacerbated the selling pressure. While ADP’s latest report showed stronger-than-expected hiring by private employers in October, the positive market sentiment was countered by a well-known outplacement firm's report of a steep increase in corporate layoffs the same month.

Economy Watch

Stocks slid again after news that consumer sentiment hit its lowest level in three years. The survey data appeared to confirm investors' fears about the fragile labor market.

After the federal government’s shutdown ended, investors' focus shifted to the Fed as they kept an eye on big consumer-related stocks for insights into the economy.

Fed Divisions

The Fed’s October meeting minutes revealed divisions among the Committee's voting members about whether to adjust rates in December. New York Fed President John Williams seemed to reassure investors that a rate adjustment at the Fed's December meeting was still a possibility.

The bounce was sharp as stocks battled through mixed economic data. However, the markets ended the month on a five-day winning streak, which curbed losses for all three major averages.

Sector Scorecard

Health Care (+9.29%) was the clear leader for the month. Energy (+1.30%), Real Estate (+1.88%), Materials (+4.35%), Consumer Staples (+4.05%), Financials (+1.83%), Utilities (+1.72%), and Communication Services (+0.51%) all finished higher.

On the downside, the Technology sector dropped nearly 5% (-4.81%). Also lower were Consumer Discretionary (-1.45%) and Industrials (-0.88%).

U.S. Market Recap

The Markets

The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance doesn't guarantee future results. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid.

World Markets

The MSCI EAFE Index trended slightly higher, rising 0.46%. Spain (+2.11%) was the clear leader among the majors. Italy (+0.42%), the United Kingdom (+0.03%), and France (+0.02%) logged modest returns. Germany (-0.51%) was under pressure.

Markets outside of Europe were mixed. Brazil (+6.37%) was among the best-performing markets, while Egypt (+6.50%), Mexico (+1.32%), and India (+2.11%) also had a solid month.

Pacific Rim markets had a rougher go of it. Australia (-3.02%), Korea (-4.40%), and Japan (-4.12%) all finished lower.

World Market Recap

The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance doesn't guarantee future results. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Indicators

Please note that, due to the delayed release of up-to-date government data for most indicators listed below, we have used non-government sources as proxies where necessary and/or as a supplement to the latest available federal data.

• Gross Domestic Product (GDP). The economy grew at a 3.9% pace in the third quarter, based on the Atlanta Federal Reserve’s GDPNow estimate on November 30. That pace was down from the 4.2% GDPNow estimate for Q3 GDP growth as of October 27, but still higher than second-quarter growth of 3.8% based on official government data from the Bureau of Economic Analysis.
• Employment. Private employers shed an average of 11,250 jobs over the last three weeks of October, according to ADP, revised up from its initial estimate of 42,000 jobs added for the month. The shutdown-delayed September jobs report showed employers added 119,000 jobs—the most substantial monthly gain since April and a significant rebound from August’s loss of 4,000 jobs (revised down from a 22,000 gain).
  

The report was all but complete when the government shut down on October 1, so this was among the first post-shutdown reports to be published by the Labor Department.

• Retail Sales. Consumer spending, excluding cars and car parts, rose 0.4% in October over the prior month, as estimated by the Chicago Fed’s Advance Retail Trade Summary—a slight uptick from September’s downwardly revised 0.3% monthly increase. The shutdown-delayed report from the Commerce Department showed the pace of retail sales cooled slightly in September, rising 0.2% over the prior month.
• Industrial Production. Manufacturing activity contracted at a quicker pace in November, falling 0.5 percentage points over the prior month, according to the Institute for Supply Management (ISM). ISM’s Manufacturing Purchasing Managers Index (PMI) composite fell to a 48.2% reading last month. (Any reading above 42.3% over a sustained period indicates an expansion of the overall economy.)
• Housing. Homebuilder confidence for newly built single-family homes rose 1 point in November over the prior month, to a score of 38. October’s score of 37 was its highest reading in six months, suggesting that homebuilder confidence is holding for now, despite less builder optimism overall. (A reading over 50 indicates most single-family homebuilders are confident in overall housing market conditions, while a lower reading indicates less builder optimism.)

Sales of existing homes rose 1.2% in October over the prior month, and 1.7% year over year. Regionally, sales increased month over month in the Midwest and South, were flat in the Northeast, and fell in the West. The median existing home sales price in October was $415,200, 2.1% higher than a year ago. Supply decreased 0.7% in September over August, and by 10.9% year over year.

• Consumer Price Index (CPI). Consumer prices rose 0.3% in September over the prior month (based on the latest available federal data), lower than the 0.4% rise economists expected and cooler than August’s 0.4% monthly increase. Year-over-year, prices rose 3.0%, also slower than economists’ expectations and a slight uptick from August’s 2.9% increase. Core inflation, which excludes volatile food and energy prices, rose 0.2% month over month and 3.0% year over year—both cooler than expectations.
• Durable Goods Orders. Orders of manufactured goods designed to last three years or longer increased 0.5% in September (based on the latest available federal data), meeting market expectations. It followed August’s upwardly revised 3.0% rise. Both shipments and orders of core goods rose, suggesting resilience in capital spending as businesses looked to the fourth quarter.

The Fed

Although the Federal Reserve did not hold a meeting in November, minutes from its October meeting were released on November 19.

The minutes showed the Committee's voting members remained divided over making another rate adjustment at the December meeting. Investors took notice of the divisions, which led to some anxiety on Wall Street.

Additionally, Fed officials gave speeches every week in November. With many key October reports (including inflation) and some September reports still being worked on from the shutdown-related backlog, Fed presidents and governors seemed to be trying to over-communicate in the absence of federal data. One notable example was a November 21 speech from New York’s Fed President John Williams in which he seemed to reassure investors that an adjustment at the Fed's December meeting was still on the table.

The Federal Reserve’s final meeting of the year is December 9-10, when the Fed will publish a Summary of Economic Projections.

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